Southern Cross Media, the business created from the merger of Kerry Stokes’ Seven West and radio group Southern Cross, announced a profit downgrade and massive job cuts as market conditions continue to deteriorate.
The cuts were foreshadowed by this masthead on Wednesday.
Southern Cross said its businesses “are performing well in market conditions that have deteriorated materially more than anticipated” through the current quarter, with revenue and earnings both expected to be below previous forecasts.
“There is strong momentum in audience and revenue share and every one of our businesses is outperforming in their markets. But we need to be honest with ourselves that those markets are under immense pressure,” Southern Cross chief executive Rohan Lund told staff.
“We are navigating a demanding market, with a tightening advertising sector and global macroeconomic pressures impacting all businesses. To create the space we need to deliver on the scale and trust of our audio, publishing and television platforms, we have no choice but to reset the cost base.”
The company said it has now commenced another significant cost-reduction program to deliver annual run-rate cost reductions of up to $150 million upon its conclusion, largely through the loss of 250 to 300 jobs – mostly from the TV side of the business.
Southern Cross Media also owns radio networks Triple M and the Hit Network as well as digital audio platform LiSTNR.
Even with cost cuts already delivered from the merger, the group said it now expects underlying EBITDA (earnings before interest, tax, depreciation and amortisation) of $185 million to $190 million, compared with the previously advised range of $200 million to $220 million.
Southern Cross shares dropped as much as 7 per cent after the announcement to a low of 55¢ on Thursday.
Southern Cross also announced $65 million to $70 million in write-downs of legacy TV content, contracts which have not delivered the commercial benefits expected.
The company did not specify which legacy contracts were becoming a problem, but Seven West was part of the $4.5 billion AFL broadcast rights deal with Foxtel in September 2022, and it also has broadcast rights for the cricket, horse racing, Supercars, and Glasgow Commonwealth Games.
For Seven West’s 2025 financial year, its last as a standalone company, the broadcaster spent $625 million on media content, which includes programming rights, compared to $312 million on employee costs.
Seven said the legacy contract provisions account for the subdued trading conditions and structural changes in the TV advertising market which reduces the direct and indirect benefits likely to be derived from a range of its legacy content contracts.
Southern Cross said the cuts will primarily impact “mid- and back-office and corporate staff, as well as non-labour costs” and were being carefully managed to limit disruption to clients, audiences and continuing employees.
The cuts and profit warning come just a month after Lund, a former executive at Seven West before its merger with Southern Cross, rejoined the business as chief executive officer.
Some staff in the television newsroom have already been informed this week by Seven’s news leadership team that their roles will be affected.
A Southern Cross board meeting on Wednesday approved the job cuts.
A short consultation period for voluntary redundancies at the company’s newspaper division closed on Monday.
Staff at West Australian Newspapers, which includes The West Australian and The Nightly, were asked to register expressions of interest for a number of voluntary redundancies on Wednesday last week.
But the consultation period for those cuts was only five days, and failed to attract enough applicants, meaning forced redundancies are likely to follow at the newspapers.
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Colin Kruger is a senior business reporter for the Sydney Morning Herald and The Age.Connect via email.
Calum Jaspan is a media writer for The Sydney Morning Herald and The Age, based in Melbourne. Reach him securely on Signal @calumjaspan.10Connect via X or email.